An Uncertain Future For Gold

The people have spoken and the market has chimed in with it’s opinion. The DOW down
486, NAS down 98.48 and 24 hr gold down 20.80 to $740.30 per ounce. Markets don’t like “change”, especially when it means less change in your pocket.

Gold stocks held up relatively well considering the way the DOW was beaten up.  It looks to me like we are settling into a consolidation trading range between 720 and 780, with resistance at 750 and strong resistance at 780.  Support comes in at 720 with stronger support at the 695 range.

Major support comes in at 683, but if that is breached, Katie bar the door.  If that were to occur 650 calls.  I don’t see that happening right now, but the possibility is there.  If we stay in the trading range for a while gold can build a strong base here before the next move up.

Anything is possible in this market.  An unexpected international event, more derivative problems (which are definitely lurking out there) or a dramatic change in monetary policy can change the markets direction in an instant.  We are near or close to the bottom in the prices for gold stocks, so I am not really worried about a major drop from here.  If we were to get a major leg down it would really set the stocks up for a major snap back.  At some point in the near future people are going to realize that the only stocks that have major upside potential are the gold stocks.

Normally the dollar rebounds after a new president is elected.  I will be watching this closely because between the bailout money and the new spending programs which will shortly be unveiled by the new administration, the dollar should make an abrupt about face and head back to .72 and lower. You simply cannot print trillions of dollars and expect the buck to hold up. Another factor that will play into the dollar’s turn around is the rise that the dollar has already put in based on people rushing out of the stock market into the “safety” of the dollar.  In my opinion this will not last too much longer.

On a side note, there are a number of coal companies that I have traded over the years that have been very lucrative.  By buying and selling the trading range, 20% to 30% profits could be had fairly regularly.  I think that door may now be closed if the new administration acts on its stated goal of “bankrupting the coal industry”. Did I miss something, or is he the American President Elect?  One door opens while another one shuts.

In the meantime the buying opportunity door to gold remains open.  Take advantage of this opportunity.

Till next time, good luck and good trading!

Also Noteworthy:

• Gold Returns to the Trading Range
• The Future Of The Dollar
• $1,000 Pushes Gold Back
• IMF To Sell Gold
• Gold Hanging Tough

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